Lee AdlerThe Fed has taken its foot off the gas pedal. We’ve been watching this for a couple of weeks now. Crunch time is almost here.…
The Fed’s massive bailout of Primary Dealers and its alphabet soup loan programs for all other big financial players, have now made moral hazard permanent…
We expected the worst, and we’ve gotten it. But that does not mean that things will get better. The revenue trends had been strong. Now…
I warned about it last week when the Fed’s POMO schedule first showed a reduced purchase rate. The Fed is taking its foot off the…
Federal tax collections are collapsing but the US Treasury now has $827 billion in cash in its bank account at the Fed. This is double…
Treasury issuance will go through the roof over the next 5 days while the Fed has decided to cut back its support. That’s a bad…
Macro liquidity measures have absolutely gone through the roof, blown the lid off, set off a tsunami, as US government spending skyrockets to the moon…
It worked well in theory and in practice for a dozen years. But at what is likely to be the most important juncture in our…
$321 Billion That’s how much cash the Fed will pump into Primary Dealer accounts this week. Guess how much new Treasury issuance there will be…
The Fed injected around $600 billion into the markets and the banking system last week. That’s about $2,000 for every American, and it was just…
On March 3, the Fed converted Not QE into Panic QE. Since then it has pumped $766 billion in cash into Primary Dealer accounts. At the same time the US Treasury issued “only” $147 billion in new debt. So in essence, the Fed issued $619 billion in excess cash.
Other than the hyperinflationary implications, what good has it done? What does it mean for us looking ahead.
With no prior announcement or clue, the Fed bought $37 billion in Treasury coupons from Primary Dealers on Friday. To pay for them it deposited $37 billion into dealer accounts at the Fed.
It was the largest single day POMO (Permanent Open Market Operation) purchase since the days of TARP and QE 1 in 2009.
It came without warning. I was so glued to the intraday live charts on Friday, I wasn’t even aware that the Fed had taken this emergency action until after the close.
We sure as hell saw the result. But this is only the beginning of this story.